What have Elections 2018 brought to the real estate sector?

Positivity has returned to the market and we have seen that happening in the stock exchange, where the Karachi Stock Exchange index increased by 42,000 points in three days after the General Elections 2018 took place. No to mention the downward journey of USD, which has already lost value against Pakistani rupee by PKR 9 only in six days. All of this shows one thing, public faith in the country, and its bright future ahead. How does the real estate sector appear to benefit from it? To get the answer for you, we have spoken to real estate developers and builders from Lahore. Here is what they had to say:

Immediate impact on the market

The impact was deemed indispensable because the market had been at a halt from the last one month at least where almost all stakeholders were busy with elections in one way or another. But were they expecting such massive response soon after the situation became clearer? Al Jalil Garden and Al-Noor Orchard Sales and Marketing Head Ejaz Mehmood Khan has seen many times higher demand for the two projects he looks after. “Our inventory is running out while demand continues to pile up, and sparing time to entertain clients and queries via phone has become difficult for us,” Khan said excitedly.

While he believes that these buyers were only waiting for the situation to become more transparent about who takes centre stage in governing the country, “many of them are essentially those who believe that their investment is now bound to grow under the promised policies and reforms for all major sectors,” said Khan.

More investment on its way

While similar activity has been registered in other parts and projects of the city, the developers we spoke to are on the same page about buyers becoming active to make an investment move. “The number of inquiries made for investment in our project has increased,” said Q Links CEO Muhammad Amjad Wattoo. Wattoo also mentioned that the buyers he is in touch with in Pakistan and from around the globe are now more ready to bring in their investment to the country.

The optimism of these investors, as per Wattoo, rests on the fact that policies that were previously deemed wrong will be fixed, and investors will be protected along with their interest for the improvement of the economy. While Wattoo believes that fixing the system that has been around for all that while will require some massive changes, the efforts will be welcomed but that will nonetheless be not enforced right away.

Safe haven for investment

We all know that the China-Pakistan Economic Corridor (CPEC) has entered the phase where development carried out under it will start to become visible. This was sensed long ago by many countries who are already on board with Pakistan to benefit from the economic corridor, streamlining these developments with proper projection will only make Pakistani more prominent at the international horizon and this obviously cannot be ignored by the people of Pakistan. Icon Valley Project Manager Muhammad Affan also witnessed the change, where he sees growing interest among people looking to bring their investments to Pakistan.

The strengthening of the Rupee and its impact

Wattoo believes that the impact of the rupee strengthening against the dollar is rather strong and this might negatively impact some investment sectors in the country but real estate is not among them. He is rather optimistic that this will be visible within a month and that’s also when a lot would be much coherent at the political end in terms of the expected collation and the turn of consequent affairs.

For almost of these developers I talked to, the time to buy property is right now. Wattoo expects to see new buying trends where the demand will continue to last for projects yet in the developing phase; essentially those offered on a payment plan.

What about the tax nuisance?

On that, no immediate change is expected by the panel while they all agree that certain clarity is needed. According to Square One Director Sales and Marketing Syed Muhammad Umair, the confusion regarding which rule to follow for determining property value for the purpose of collecting taxes should be removed.

Umair believes that buyers’ reservation on declaring the properties’ market value should be addressed. He is also in favour of using the valuation tables notified by the Federal Board of Revenue in the past for calculating taxes imposed at the federal level. Umair also believes that the anomalies pointed out by the stakeholders in these table should also be removed.

While the panel is all up for the government to help move the property market in the direction that guarantees growth for countless related industries, they don’t believe that addressing these concerns will happen so soon after the new government is formed. Such reforms will take some time.

What will be the future of amnesty scheme?

On that end, many are clear that the scheme promises to bring in the much-needed revenue for Pakistan to deal with the threats of seeking immediate loans from International Monetary Funds. A word or two in favour of this scheme can clear the air for many who were previously not quite sure about availing the scheme.

While the scheme expires today, it is hoped, or rather wished for, that extension be granted to its deadline. When asked if it is too late to expect such a major development, Goldcrest CEO Muhammad Arif Suria said a one-month extension was granted on the last of the scheme exactly one month ago. He is hoping that the new setup will encourage more people to trust the concerned authorities with their details on assets earned locally and stacked offshore.

Suria is of the view that not only that the amnesty scheme will account for increasing Pakistan’s USD reserves, it will also offer bring along while-money holders who would confidently be investing in other investment sectors including the real estate. Once this cycle will start, more will follow, giving property the recovery which is due by now.

Is recovery really due?

To that question, we received mixed reviews where some believe that process has already started while others indicated that more prominent impact can be witnessed by 2020. Umair believes that the investment cycle has its turns to take, and expecting a never-ending rise in real estate value is not unrealistic, it’s also unfair. “With housing shortfall of over 1 million, real estate value in Pakistan should continue to go up,” said Umair.

For the property market to bring the next round of investment, in a way, the drop in investment activity and the consequent fall in property rates was only part of the process, he added. He also believes that before the existing issues are addressed in terms of increasing buying strength of the people by removing differences in lifestyle, demanding for a boom in the real estate market would be rather cruel.

So what should be the way to go about it?

The answer to this lies in the promise to invest in human development sector, by pledging to elevate poverty, by giving everyone an equal chance to live in country that promised to them. That’s also what has convinced Khan that much is destined to change soon. For making this all happen, related reforms, friendly policy, utter transparency and strict implementation of law is crucial, he added. And that is also what will convince all of us to pay our due taxes with the strong conviction that our money is in good hands.

So if we decide to pay our taxes with intensions to arrange for the revenue that will help our country prosper, what can possibly go wrong with Pakistan? It looks like a win-win situation ahead for us, all we need is a little show of honesty in policies and reforms. And that too isn’t far from happening, what do you say? Let us know through feedback by leaving a comment below.

For more updates on what’s expected to happen next in the property sector, stay tuned to Zameen Blog.